APAC insurers lag peers in risk management maturity

But AM Best ranks 60% of APAC insurers as financially strongest.

Mature insurance markets in Asia-Pacific (APAC) continue to outperform emerging ones, supported by stronger governance, stable regulatory frameworks, and solid capital adequacy, according to AM Best’s latest Asia-Pacific Benchmarking Report. 

The APAC insurance industry in 2024 remained relatively stable, with no major catastrophe events disrupting underwriting results. 

Balance sheet resilience remained the cornerstone of financial strength in the region, with about 60% of rated insurers classified under the top two strength categories — “Strongest” or “Very Strong.” AM Best said this reflects sound capitalisation and prudent asset management.

Insurer profitability improved due to higher investment income from rising interest rates and disciplined underwriting practices. 

Many markets recovered from the COVID-19 pandemic’s earlier drag on earnings, particularly in Thailand and Taiwan. 

The rapid adoption of new energy vehicles, especially in China, created growth opportunities but also brought higher claims frequency and repair costs.

In enterprise risk management (ERM), more than 90% of insurers achieved an “Appropriate” rating, though only a small share reached “Very Strong.” 

AM Best noted that APAC’s ERM maturity ranks mid-to-lower tier globally (ahead of MENA but behind Europe and North America), indicating room for improvement in integrating risk management into corporate decision-making.

The report evaluates rated insurers and reinsurers across Asia and Oceania, including mature markets such as Japan, Singapore, Hong Kong, South Korea, Australia, and Taiwan, as well as developing markets in Southeast Asia and South Asia.